Japan Cabinet OKs new stimulus package to pump up growth
TOKYO (AP) — Japan’s Cabinet approved a fresh economic stimulus package on Tuesday worth more than 28 trillion yen ($275 billion), Prime Minister Shinzo Abe’s latest effort to get the stalling recovery back on track.
Abe called the package, part of a supplementary budget for the parliament to approve in an extraordinary session starting in September, “an investment for the future.”
It focuses on Japan’s agriculture and tourism, and on providing support for the child and elder care industry to enable more women to work full-time, since the labor force is shrinking as the population ages.
Japan’s economy has stagnated for years, with short spurts of faster growth, as companies have focused investments in faster-growing markets overseas.
Economists said the measures approved Tuesday include a total of only 7.5 trillion yen ($73.5 billion) in government spending, spread over a number of years. The rest is meant to be subsidized lending and private sector spending.
“Publishing a vastly inflated headline spending figure is nothing new, and especially popular during times of acute crisis,” Marcel Thieliant of Capital Economics said in a commentary.
He said the official forecast that the package would boost Japan’s GDP by only 1.3 percentage reflected that “the government doesn’t believe its own numbers.”
Public works projects that would be covered by deficit bonds are also raising concerns because of their possible impact on Japan’s already huge public debt, which is more than twice the size of its economy.
Since Abe took office in late 2012, he has sought to boost growth by pumping massive amounts of money into the world’s third-biggest economy. But lavish monetary easing and public works spending so far have failed to reignite growth as much as hoped.
Including both the government and other spending, the package includes:
—3.5 trillion yen ($34.3 billion) for measures to expand child and elder care support, including improving salaries and benefits for caregivers to attract more workers, while introducing robots in short-handed nursing homes. The money will also go to measures to promote paid maternity and childcare leaves, scholarships and loans for students.
—Payments of 15,000 yen ($147), announced earlier, to low-income households.
—10.7 trillion yen ($105 billion) for infrastructure projects to help promote tourism — one of the few sectors of the economy that is booming — by expanding ports to accommodate ultra-large cruise ships, upgrading airport facilities and accelerating a decades-long high-speed maglev train project.
—Subsidies for exporters of farm produce and other products.
—10.9 trillion yen ($106 billion) is to help support small and medium-scale companies affected by Britain’s decision to exit the European Union.
—3 trillion yen ($29 billion) will be spent on reconstruction of areas hit by the 2011 earthquake and tsunami and by another deadly quake that struck southern Japan earlier this year.
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